INVESTMENT, Trade and Industry Minister Tengku Zafrul Abdul Aziz has assured that the Malaysia–United States Reciprocal Trade Agreement (ART) fully upholds the nation’s sovereignty and economic independence, refuting claims by former prime minister Tan Sri Muhyiddin Yassin that it compromises the country’s autonomy
In a statement on Saturday specifically addressing Muhyddin’s concerns, Tengku Zafrul said the government had taken a comprehensive “whole-of-government” approach to negotiations, ensuring that national policies such as Bumiputera rights, government procurement rules and equity ownership limits in strategic sectors remained fully protected.
“The ART is fundamentally different from a Free Trade Agreement. Reciprocal tariffs are unilateral taxes imposed by the United States, and our negotiations were essential to safeguard Malaysia’s access to one of its most critical export markets,” he said.
He highlighted that the United States continues to be among Malaysia’s largest trading partners, with bilateral trade reaching RM325 billion in 2024 and RM166.38 billion recorded between January and September this year.
Tengku Zafrul explained that maintaining stable access to the American market was vital to protect the livelihoods of millions of Malaysians employed across export-driven industries such as electrical and electronics, aerospace, rubber, cocoa and pharmaceuticals.
“Failure to act decisively could jeopardise jobs and income for millions of citizens,” he warned.
He added that the agreement included clear clauses guaranteeing that its implementation would remain “subject entirely to domestic laws, national security considerations and economic interests,” affirming Malaysia’s full sovereign control.
Under the agreement, Malaysia secured a tariff reduction from 25 to 19 per cent — the lowest among ASEAN nations maintaining trade surpluses with the US — alongside exemptions on 1,711 tariff lines for key exports such as palm oil, rubber goods, cocoa products, aerospace components and pharmaceuticals, collectively worth RM22 billion (USD5.2 billion).
Rejecting the agreement, he said, could have seen tariffs soar again to as high as 30, 40 or even 100 per cent, crippling export competitiveness and undermining investor confidence.
“Predictability and certainty are fundamental to business confidence. Investors will not commit to a country perceived as indecisive in protecting its trade access,” he said.
Responding to specific criticisms raised by Muhyiddin, Tengku Zafrul clarified that Article 3.4 of the pact merely prevents the “forced transfer of technology”, a standard clause in global trade deals that still allows Malaysian regulators lawful access to proprietary information for legitimate regulatory or prudential purposes.
On Article 5.1 concerning sanctions against third countries, he stressed that Malaysia would not be compelled to mirror US actions automatically. “It clearly states that any action will be taken according to Malaysian domestic law and only in matters of shared economic concern,” he explained.
He added that Article 5.2 on export controls simply reaffirmed Malaysia’s existing framework under the Strategic Trade Act 2010, while Article 5.3 on customs data access required all information-sharing to comply with national laws and regulatory standards.
Addressing claims about investment commitments, Tengku Zafrul said Article 6.1.3 involved no government funding and reflected existing commercial procurement plans by Malaysian multinational and government-linked companies.
He also reaffirmed Malaysia’s firm stance under Article 6.2 on rare earth exports, maintaining the government’s long-standing ban on the export of raw rare earth elements (REE) to ensure value-added downstream development and high-skilled job creation within Malaysia.
“Malaysia will never revert to being a nation that merely extracts and sells raw materials cheaply. All strategic sector development will remain governed by Malaysian law, on Malaysian soil, under full national control,” he said.
Tengku Zafrul concluded that the ART not only preserves Malaysia’s sovereignty but also strengthens the country’s reputation as a trusted trading partner and a resilient, forward-looking economy.
Earlier, the Minister said the government is conducting a thorough assessment of all potential risks to ensure Malaysia’s sovereignty and national interests are fully protected before formalising the Reciprocal Trade Agreement (ART) with the United States.
He said the negotiations involve all relevant ministries and agencies, with final approval to be determined by the Cabinet.
“The negotiating team has examined every risk and aspect to ensure this is the best possible agreement for Malaysia. In any negotiation, it cannot be one-sided — there are matters we must give, and matters we must defend,” he said during the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting in Gyeongju on Saturday.
“If there are issues we believe should not be compromised, we maintain our position. But if there is room for further discussion, we negotiate to secure the best outcome,” he added.
Tengku Zafrul emphasised that while the government welcomes public feedback, it must be based on facts rather than political narratives. He said more engagement sessions will be held to clarify the purpose and content of the agreement amid ongoing confusion and misinterpretation.
“Some statements have been made, but there may have been misunderstandings. What matters is that we continue engaging,” he said.
He also cautioned against politicising the issue, saying it risks obscuring an objective assessment of the agreement’s benefits for Malaysia and its people.
Both Tengku Zafrul and Prime Minister Datuk Seri Anwar Ibrahim reiterated in Parliament that Malaysia’s sovereignty, national policies, and bumiputera rights had not been compromised in any trade negotiation.
Malaysia has signed 19 free trade agreements (FTAs) to date, including with the European Union, the United Arab Emirates and, most recently, South Korea. Tengku Zafrul said this experience serves as an important foundation for ongoing talks with the US.
“The government will continue to provide clear explanations. What matters most is the benefit to the people,” he said.
Under the new arrangement, 1,711 Malaysian products have been granted US import tariff exemptions at a reduced rate of 19 per cent. - November 1, 2025
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